GS Paper II

News Excerpt:

The government is likely to put an end to the FAME (Faster Adoption and Manufacturing of Electric Vehicles) subsidy scheme once FAME II comes to an end in March, 2024.

Key Points

• Instead of introducing a third phase of the scheme or FAME III, inter-ministerial discussions are on to replace it with a modified production-linked incentive (PLI) scheme for the auto sector, which will also be applicable for passenger electric vehicles.
• Currently the FAME II scheme is applicable to two-wheelers, three-wheelers, and four-wheelers which are used for public transport. 
• It has a budgetary outlay of Rs 10,000 crore.

Current Status of PLI Scheme

• At present, there are two PLI schemes for the auto sector, which includes batteries. 
• Production Linked Incentive (PLI) Scheme for Automobile and Auto component industry with a budgetary outlay of ₹ 25,938 crore, provides financial incentives to boost domestic manufacturing of Advanced Automotive Technology products including electric vehicles and their components.  
• The scheme provides incentive up to 18% of eligible sales of electric vehicles and their components.
• The one relating to advanced chemistry cell (ACC) batteries has an outlay of Rs 18,100 crore. 
• The scheme incentivises the establishment of Giga scale ACC manufacturing facilities in the country for 50 GigaWatt hour (GWh).  
• These ACCs will be used in batteries which are aimed to promote the widespread adoption of EVs.
• It’s likely that a comprehensive Auto PLI 2.0 will have a higher outlay than the combined outlay of the current Auto PLI.
• A comprehensive Auto PLI 2.0 which subsumes all categories of electric vehicles. 
• It would make sense in negotiating with Tesla for its manufacturing plant in India. 

Reasons to stop FAME scheme

• The government is working on some sops, which would enable Tesla to set up its manufacturing plant in India, it makes sense to come out with a modified auto PLI (PLI 2.0) which takes into account subsidies given to two-wheelers, three-wheelers, four-wheelers used for public transport as well as EVs.
• Since the disbursement of PLIs are on the basis of pre-determined incremental sales and production targets, there would also be no scope for players to indulge in irregularities which were found in the FAME scheme by certain two-wheeler manufacturers.

Conclusion

Sustainable fuel and transportation infrastructure is the need of the hour at a time when the world is experiencing the adverse effects of climate change and greenhouse emissions. India is one of the countries that is working for a sustainable future with schemes like FAME and PLI for less emissions and clean energy, as well as sustainable transportation infrastructure.